Under what circumstances related to death is a transfer of interest considered a 'Transfer' according to the Byrider franchise agreement?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
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Franchisee's Business; (v) any ownership interest in the Franchisee (if the Franchisee is a legal entity); or (vi) any ownership interest in any of the Franchisee's owners (if such owners are legal entities). A transfer of the ownership, possession or control of the Franchisee's Business, or substantially all of its assets, may be made only with a transfer of the franchise granted under this Agreement. Any transfer without the Company's approval is a breach of this Agreement and has no effect.
A "transfer" shall not include a transfer of a deceased owner's ownership interest in Franchisee or Franchisee's owner to an existing owner so long as a new majority owner, if any, signs all documents a majority owner is required to sign under this Agreement.
- B. In this Agreement, the term "Transfer" includes a voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition. An assignment, sale, gift, or other disposition includes the following events:
- (1) merger or consolidation or issuance of additional securities or other forms of ownership interest;
- (2) any sale of a security convertible to an ownership interest;
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a transfer of interest is considered a 'Transfer' when an owner of a Byrider franchise dies. Specifically, if the Franchisee, one of the Franchisee's owners, or an owner of one of the Franchisee's owners dies (if natural persons), a transfer of interest in the Franchisee, the Franchise Agreement, the Franchisee's Business or substantially all of its assets, or the right to occupy the Business Location or the Franchisee's owner by will, declaration of or transfer in trust, or under the laws of intestate succession, is considered a transfer.
This means that upon the death of a Byrider franchisee or a relevant owner, the manner in which their interest in the franchise is passed on—whether through a will, trust, or state law—constitutes a transfer under the franchise agreement. This triggers the need for Byrider's approval and adherence to specific conditions for the transfer to be valid. This provision ensures that Byrider maintains control over who becomes a franchisee, even in the event of death, to protect the brand and its standards.
However, a transfer of a deceased owner's ownership interest in Franchisee or Franchisee's owner to an existing owner is not considered a transfer as long as a new majority owner, if any, signs all documents a majority owner is required to sign under the Agreement. This exception allows for a smoother transition of ownership within the existing ownership structure without triggering the full transfer process, provided the new majority owner assumes the necessary obligations. This exception can be beneficial for family-owned franchises or partnerships where the remaining owners wish to continue the business without external interference or additional fees.